May 2021 | Commentary | Supply Chain Visibility

Getting a Grasp on Transport Spend

Tags: Risk Management, Transportation Management, Transportation

Shipping has been inexorably changed in light of COVID-19. Changes that have been slowly building for a decade are being infinitely compounded as consumers shift to e-commerce versus standard brick-and-mortar shopping. With demand for direct-to-consumer business increasing, delivering shipments to consumers quickly, at the cheapest cost, is now a necessity for companies.

Hannah Testani, Chief Operating Officer, Intelligent Audit

Now more than ever, it is imperative that shippers get a grasp on transportation spend. As carrier networks exceed the unforeseen demand that strains their systems, shippers need to quickly adapt and redesign their networks.

Whether it is carriers not having the capacity to manage shippers' growing volumes, new tariffs, or geopolitical issues, continuous change is the new normal. The days of managing network redesigns using spreadsheets that can take weeks to finish are long gone. Shippers need to optimize transportation spend in real time and make changes on the fly.

With the right software and the mentality that optimization is essential, gaining these network efficiencies will be a triple win, enabling shippers to deliver shipments to their consumers faster, at lower cost and with fewer exceptions.

The next frontier in supply chain visibility entails leveraging powerful analytical tools and algorithms to create maximum efficiency, and help shippers adapt to a constantly changing environment. It is vital for shippers to have access to both predictive and prescriptive analytics—on demand and in real time.

The surcharges imposed by national carriers throughout COVID have increased steadily and we have no idea when—if ever—these surcharges will subside. These costs have a huge impact on a shipper's bottom line and it is clear that the national carriers are trying to price these types of shipments out of going through their networks.

The Visibility Challenge

The traditional supply chain process is ill-equipped to deal with the complexity and increased shipping expectations that have arisen in the past decade. This challenge becomes more glaring as retailers continue to diversify channels to e-commerce from brick-and-mortar, or a hybrid of the two. Returns compound the visibility challenge further.

For organizations with the largest footprints, the lack of knowledge and control over their transport spend is even more pronounced. With widespread infrastructure, diverse stakeholders, and high shipping volumes, companies cannot afford to be blind to their logistics networks.

Companies must optimize their distribution channels and provide the greatest benefits to their customers: same-day, next-day, and two-day shipping. When deciding which service to use, shippers need full visibility into their entire network to find opportunities where they can optimize transportation or reconfigure their footprint for greater efficiency.

Historically, retailers had to use 2-day or next-day express shipments to deliver competitively against Amazon's next-day shipping model. Leveraging stores allows shippers to downgrade their service utilization to ground and still achieve a one-day transit time.

It is also important to continuously monitor service utilization and understand when shipments are going out by air and where ground is cheaper or will be delivered in the same amount of time. As national carriers quickly expand their networks to support current demands, they expedite the delivery of some shipments in their network.

As increased costs, uncertainty, and changes in expectations continue to impact shipping, shippers must understand all the available options.






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